Excess Returns

In this enlightening discussion, Carl Kaufman, Co-President and Co-CIO of Osterweis Capital Management, shares his extensive expertise in fixed income investing. He dives into the complex dynamics of the bond market, outlining how credit and interest rate cycles can influence investor outcomes. Carl emphasizes the shifting credit quality landscape and why some high-yield segments may be more resilient than perceived. He also warns of potential risks in the AI Capex boom and discusses the importance of active management in navigating bond investments.

Rob Arnott, founder of Research Affiliates, shares his insights on market bubbles, emphasizing how narrative drives pricing and cautioning against shorting them. He draws parallels between the current AI-driven market and the dot-com era, highlighting practical strategies for concerned investors, like diversification and focusing on value stocks. Arnott also discusses the challenges of AI monetization, the importance of historical context in investment strategies, and his preference for emerging market opportunities and fundamental indexing over traditional methods.

The discussion kicks off with a deep dive into financial nihilism, sparked by Robinhood's bold cash delivery claims. The hosts tackle sports betting's legality and its societal impact while raising questions about market regulations. Generational perceptions of wealth highlight a troubling disconnect regarding asset values, particularly in housing. They also critique tech monopolies that drive underinvestment in crucial sectors. The conversation closes with ideas on countering nihilism through personal traditions, underscoring the importance of meaningful community.

Brent Kachuba, founder of SpotGamma, dives into the intricate world of options flows and their impact on market movements. He discusses how daily market shifts are increasingly influenced by options trading and the current volatility landscape. The conversation touches on the disconnect between high market levels and underlying investor unease, parallels to the dot-com era, and how pivotal events like NVIDIA's earnings could sway market sentiment. Brent also explains concepts like negative gamma and the dynamics of monthly options expirations, shedding light on the current market stress.

Bob Elliott, Founder/CEO of Unlimited and expert in macroeconomics and ETF strategies, shares insights on the current economic landscape. He discusses the late-cycle economy and the disconnect between market optimism and real-world data. Elliott reveals how AI spending isn’t translating to economic gains yet, questioning the returns on significant investments in the tech sector. He also warns of risks in private markets and highlights new hedge-fund-style ETFs that aim to provide alpha at lower costs, utilizing innovative replication strategies.

Chris Mayer, an investor and author behind the '100 Bagger' concept, and Robert Hagstrom, a portfolio manager focused on long-term investing, dive into what makes a business great. They discuss crucial traits like sustainable sales growth and high returns on capital. Learn how to build conviction amidst market volatility, the importance of analyzing management quality, and the pitfalls of behavioral mistakes. They also explore the significance of owner earnings and how to navigate fast-changing industries while maintaining investment discipline.

Bill Bengen, a retirement researcher known for creating the original 4% withdrawal rule, shares his insights on retirement planning. He discusses how his perspective has shifted, suggesting retirees may safely withdraw closer to 4.7%. Bengen explores the significance of diversification, the U-shaped equity glide path, and the implications of inflation on withdrawal rates. He also highlights the importance of enjoying retirement and shares strategies for mitigating sequence-of-returns risk. His personal journey and evolved thinking make this conversation both informative and inspiring.

Michael Mauboussin, a prominent investment strategist and author, shares his insights on overlooked but vital investing concepts. He highlights the importance of base rates for making grounded decisions in investing and life. Mauboussin explains his expectations investing framework, emphasizing how to reverse-engineer stock prices. The discussion also delves into the paradox of skill, detailing how increasing skills can heighten the role of luck. Listeners gain practical takeaways applicable across various fields, showcasing how to make more informed and rational choices.

Rupert Mitchell, founder of Blind Squirrel Macro, dives into the transformative landscape of China’s markets. He reveals insights from his recent trip, highlighting an 8–10 year bull market potential fueled by industrial recovery and favorable valuations. Rupert addresses the risks posed by AI-driven CapEx from the Mag 7 and contrasts U.S. markets with international equities. He also discusses emerging opportunities in Africa and Uzbekistan, alongside his unique ‘Bushy’ defensive portfolio positioning and insights on the evolving credit landscape.

Richard Bernstein, CIO and CEO of Richard Bernstein Advisors and a portfolio manager with decades of experience, explores the current speculative market landscape. He argues that while we are in a highly speculative environment, unique opportunities exist for patient investors. Bernstein delves into profit cycles versus economic cycles and highlights the potential resurgence of non-U.S. quality stocks. He also discusses the pitfalls of investor behavior, inflation dynamics, and the resurgence of value investing as well as long-term trends like deindustrialization.